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This is conference and roundtable season, an annual rite when law firm leaders and clients get together to agree, first, that important changes are looming over the legal landscape and, second, that for all the ferment, the business remains essentially the same. I’ve been attending these meetings for years, and I can conclude, safely, that both sentiments are exactly correct. The apparent contradiction stems from the fact that these discussions address different parts of the marketplace. It’s clear that the clients see their legal dockets as binary: those matters for which price is no object, and everything else. And it’s equally clear that managing partners are determined, in some cases desperate, to capture as much of the first-world work as they can. This reality cries out for a new law firm calculation. Let’s call it the High-Value Ratio: What percentage of firm work is largely price-insensitive? Measured annually, the HVR would give managers the ability to make realistic plans and promises. Good luck trying to develop a league table with your peers. For many if not most firms, the High- Value Ratio won’t be comforting. The best scores probably hover around 90 percent; in the real world, which is to say, firms not located on the corner of Sixth Avenue and Fifty-second Street, you’d do well to come in at 40-60 percent. Which brings us to the other part of the conversation. It’s the price-sensitive work where much of the hand-wringing takes place. This is the sector where bidding reigns and the inexorable process of commoditization plays out. As any number of consultants will gladly tell you, this process converts law firm partners into managers; men and women trained to spot issues and turn them to their favor become, instead, captains of production units. This isn’t all bad. It’s forcing law firms to confront a long-standing question that they prefer to ignore or dismiss as inapplicable to the profession: What does it cost to do what you do? If your answer is hours times rates, you’re not listening to what your clients are saying about the work they consider standardized. Perhaps the clients are wrong or insensitive to the nuances inherent in many product or insurance or environmental cases, to take just a few examples. But they are the ones paying the bills. You can, of course, just walk away; no client can force you to treat a bunch of cases as a similarly situated bundle fit for bidding. But given the HVR I’m suggesting above, that can be an expensive and, in some cases, dangerous proposition. You could just offer discounts. But really, that’s so 2003. What the clients seem to be saying is that instead of knocking 20 percent off the rate card, they want you to make a business calculation and set a price. And then they want you to manage the cases to it. The wise clients will build in bonus provisions (and we can have a Wise-Client Ratio, too, if you’d like). Now for the interesting question: Will these remain two separate discussions? Will clients continue to flick a toggle switch on their attitudes toward costs, depending on the stakes or the nature of the work? I think the answer is yes. For all the talk of disruptive technologies and behaviors, when a CEO is in trouble, hiring, skill, and judgment will trump a faint desire to have certainty of cost. Which, of course, only adds to the pressures on law firms to figure out how to maintain their HVR status or attain one if they don’t have it. I suspect that despite recent events, there simply isn’t enough mischief in corporate America-or enough premium- priced deal work-to keep all the law firms fat. That’s a subject worthy of a conference.

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